Saturday, February 29, 2020
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Friday, February 28, 2020
The Executive Suite: 15% Off Medical Practice Supplies
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Thursday, February 27, 2020
The Executive Suite: Strategy execution habits of thriving practices
The Executive Suite: Strategy execution habits of thriving practices: Oftentimes physicians approach me because they don’t think their practice has a winning strategy. Moreover, they tell me that they do not be...
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Strategy execution habits of thriving practices
Oftentimes physicians approach me because they don’t think their practice has a winning strategy. Moreover, they tell me that they do not believe their practice has the right capabilities to execute the current strategy they were following. Having capabilities is all well and good, but just because you are capable of doing something, does not mean you are going to be successful. “Winning” practices often don’t follow prevailing trends, but rather follow five habits that contradict conventional wisdom to out-execute and out-compete their rivals. Here is my personal take on the five strategy execution practices used by thriving practices:
1. Commit to an identity
Thriving practices focus on a clear target market and focus on what makes them unique with that patient demographic. They avoid chasing growth by pursuing multiple markets in areas where they have no clear point of differentiation. They get very clear about their strategic position and build capabilities that will help to support that position over the long term.
2. Do not get carried away with benchmarking
Practices that dominate the market keep an eye on what competitors are doing, of course, but they do not blindly follow the herd. In fact, they know that using the same technologies, following the same methodologies, and benchmarking the same key performance indicators as your competitors is just a recipe for mediocrity. The leading practices develop a winning strategy that will set them apart in their community (and perhaps in their specialty), and translate their long-term strategic moves into their current projects and performance metrics.
3. Prune what doesn’t matter to invest more in what does
There is a saying: “You have to keep pruning the rosebush if you want to create beautiful blooms”. It’s easy to keep adding new features (e.g. services, technologies) to your practice, and adding new projects for your practice to work on. What’s more powerful is to trim away the bloat and excess, and only focus your resources on the small number of things that really matter in pursuit of your strategy. The key to effective strategic leadership is to figure out what is truly "core", vs what is "context" and "non-core" in terms of your activities and service/technology offerings.
4. Stop constantly reorganizing
I’ve seen many practices try to re-strategize by constantly reworking their organization chart and rethinking incentives. This very rarely (if ever) is a viable solution. Successful practices resist disruptive reorganizations and instead put their core values and culture to work. They use culture, not structure, to drive change.
5. It is not about agility
Practices that dominate the market are not “agile” in the sense that they respond to external change as rapidly as possible. Rather, they are “smart agile”. Physician leadership needs to be agile enough to address threats, or pursue promising opportunities that support your plan, but remain disciplined and focused enough so that you do not end up “chasing squirrels”, lurching from one idea to the next while you lose sight of your original strategic intentions. Successful physicians shape their future by creating the change they want to see.
Many of the practices I work with think they have strategy, but a test shows they haven't made any strategic choices at all. Consider these steps to quickly determine whether your practice understands what a real strategy is and whether or not they actually have a strategy that can be successful.
Step 1: Identify your long-term strategic moves
I often challenge physicians by asking, “Do you have a real strategy for long-term success?” Strategy requires disciplined analysis and a deep understanding of how not only the healthcare industry but also how your specialty is likely to play out in the coming years. Then you need to get very clear on the few, key strategic moves your practice needs to make in order to position yourself for future success.
Strategy requires tradeoffs. You cannot be everything to everybody; you cannot just blindly copy the moves of your competitors and hope to win. You have to figure out what to say "YES" to, and what to say "NO" to. You make clear cut choices about how you will compete in the future, and then allocate your time and resources accordingly. Keep in mind that less is more when it comes to strategy execution. I recommend that you whittle your wish list down to only a few strategic moves that will have the greatest impact, and say “No” to everything else.
Step 2: Question the validity
Take a look at each strategic move in isolation, and ask yourself, “Could we do the exact opposite, and would that also be a valid strategy?” If doing the opposite of your stated strategic move would be stupid or nonsensical, then it is not really a strategic move at all. It is simply a table stakes requirement for doing business in your specialty. It is likely to be something that many of your competitors will also be doing.
Your strategic move should be something that will help you to establish a competitive advantage. A strategic move should help you to create a category or a niche in your catchment area (and perhaps more broadly in your specialty) where you can genuinely claim a position of leadership or a meaningful point of difference. A strategic move should make it very clear what are going to say “YES” to, and by association what you are saying “NO” to, and what you are NOT going to do.
This is where I have seen many practices fail. Their stated strategies often include generic fluff like, “provide a world-class patient experience.” Well duh, really? So the opposite of that would be to provide lousy patient experience, and that would also be a valid strategy? I don’t think so. You haven’t actually made a strategic choice at all.
Take a look at your long-term strategic moves now, and question viability of those courses of action. I’m betting a few of you will realize there's still quite a lot of work to be done.
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1. Commit to an identity
Thriving practices focus on a clear target market and focus on what makes them unique with that patient demographic. They avoid chasing growth by pursuing multiple markets in areas where they have no clear point of differentiation. They get very clear about their strategic position and build capabilities that will help to support that position over the long term.
2. Do not get carried away with benchmarking
Practices that dominate the market keep an eye on what competitors are doing, of course, but they do not blindly follow the herd. In fact, they know that using the same technologies, following the same methodologies, and benchmarking the same key performance indicators as your competitors is just a recipe for mediocrity. The leading practices develop a winning strategy that will set them apart in their community (and perhaps in their specialty), and translate their long-term strategic moves into their current projects and performance metrics.
3. Prune what doesn’t matter to invest more in what does
There is a saying: “You have to keep pruning the rosebush if you want to create beautiful blooms”. It’s easy to keep adding new features (e.g. services, technologies) to your practice, and adding new projects for your practice to work on. What’s more powerful is to trim away the bloat and excess, and only focus your resources on the small number of things that really matter in pursuit of your strategy. The key to effective strategic leadership is to figure out what is truly "core", vs what is "context" and "non-core" in terms of your activities and service/technology offerings.
4. Stop constantly reorganizing
I’ve seen many practices try to re-strategize by constantly reworking their organization chart and rethinking incentives. This very rarely (if ever) is a viable solution. Successful practices resist disruptive reorganizations and instead put their core values and culture to work. They use culture, not structure, to drive change.
5. It is not about agility
Practices that dominate the market are not “agile” in the sense that they respond to external change as rapidly as possible. Rather, they are “smart agile”. Physician leadership needs to be agile enough to address threats, or pursue promising opportunities that support your plan, but remain disciplined and focused enough so that you do not end up “chasing squirrels”, lurching from one idea to the next while you lose sight of your original strategic intentions. Successful physicians shape their future by creating the change they want to see.
Testing your strategic choices
Many of the practices I work with think they have strategy, but a test shows they haven't made any strategic choices at all. Consider these steps to quickly determine whether your practice understands what a real strategy is and whether or not they actually have a strategy that can be successful.
Step 1: Identify your long-term strategic moves
I often challenge physicians by asking, “Do you have a real strategy for long-term success?” Strategy requires disciplined analysis and a deep understanding of how not only the healthcare industry but also how your specialty is likely to play out in the coming years. Then you need to get very clear on the few, key strategic moves your practice needs to make in order to position yourself for future success.
Strategy requires tradeoffs. You cannot be everything to everybody; you cannot just blindly copy the moves of your competitors and hope to win. You have to figure out what to say "YES" to, and what to say "NO" to. You make clear cut choices about how you will compete in the future, and then allocate your time and resources accordingly. Keep in mind that less is more when it comes to strategy execution. I recommend that you whittle your wish list down to only a few strategic moves that will have the greatest impact, and say “No” to everything else.
Step 2: Question the validity
Take a look at each strategic move in isolation, and ask yourself, “Could we do the exact opposite, and would that also be a valid strategy?” If doing the opposite of your stated strategic move would be stupid or nonsensical, then it is not really a strategic move at all. It is simply a table stakes requirement for doing business in your specialty. It is likely to be something that many of your competitors will also be doing.
Your strategic move should be something that will help you to establish a competitive advantage. A strategic move should help you to create a category or a niche in your catchment area (and perhaps more broadly in your specialty) where you can genuinely claim a position of leadership or a meaningful point of difference. A strategic move should make it very clear what are going to say “YES” to, and by association what you are saying “NO” to, and what you are NOT going to do.
This is where I have seen many practices fail. Their stated strategies often include generic fluff like, “provide a world-class patient experience.” Well duh, really? So the opposite of that would be to provide lousy patient experience, and that would also be a valid strategy? I don’t think so. You haven’t actually made a strategic choice at all.
Take a look at your long-term strategic moves now, and question viability of those courses of action. I’m betting a few of you will realize there's still quite a lot of work to be done.
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Saturday, February 22, 2020
The Executive Suite: 15% Off School Hall Pass Pads
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The Executive Suite: 2 Shortcuts to Starting Your Own Business
The Executive Suite: 2 Shortcuts to Starting Your Own Business: Are you dying to start a business–now? Entrepreneurs are impatient by nature, so going through all the steps required to start a business—fr...
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Friday, February 21, 2020
The Executive Suite: 15% Off All Business Cards
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Behind the rise in large outlier medical malpractice verdicts
Severity—the average cost of a medical malpractice claim—continues its relentless increase. Though this is a long-term trend (severity has not decreased since we started tracking it in 1976), we are now seeing a sharp increase in outlierverdicts. These are awards well in excess of common policy limits, often setting records for the venue in which they are made. This disturbing trend threatens the viability of smaller medical malpractice insurers, who may not have the resources to cover such large verdicts, and portends medical malpractice rate increases, while adding to burgeoning healthcare costs.
Nationwide, the percentage of medical malpractice claims greater than $500,000 has increased from less than 10 percent in 1999 to almost 20 percent in 2017.1 The number of verdicts in excess of $25 million has increased from four in 2014 to 17 in 2018.2 Nearly all states have seen these awards, with 41 states reporting verdicts greater than $10 million during the last six years.3
Clinicians may well ask why severity is increasing at the same time the medical community has made important strides in patient safety and the frequency of claims has dropped—at The Doctors Company, we’ve seen a drop from a high of 17 per 100 physicians in 2000 to fewer than seven per 100 physicians today.
The consolidation of healthcare is one driver of high verdicts. Large corporate defendants, almost always with very high policy limits, make attractive deep pockets in the eyes of sympathetic juries.
Monetary desensitization is another important factor. Our national debt exceeds $22 trillion, our annual budget is over $4 trillion, companies with no profits have valuations in the billions, and top athletes commonly sign contracts worth hundreds of millions of dollars. Though paid indemnities in average malpractice claims average many hundreds of thousands of dollars, and typically cover 100 percent of economic losses, these numbers may appear less impressive in an era where nine- and 13-digit numbers are commonly used.
Batch claims, lawsuits in which plaintiffs bring multiple claims against one defendant based on the same behavior, are another contributor. An example is the claims brought against compounding pharmacies alleging that breaches in sterile technique affected many individual patients.
Social media is a potent facilitator of batch claims. A patient with an unexpected adverse outcome from a particular operation may post, "Dr. X botched my surgery." Others who believe they have had a similar experience respond, and an attorney gathers them all into a batch claim. Claims of this kind were distinctly unusual in the past but are now an annual occurrence.
States lacking caps on noneconomic damages are particularly vulnerable to these factors. Without caps, awards for “pain and suffering” are unlimited and are almost always present in outlier cases.
The increase in severity adds to the costs of healthcare, which is already 18 percent of our gross national product.4 At The Doctors Company, we have seen a 55 percent increase in severity—the cost of the average claim—from 2000 to 2018. This drives an increase in insurance rates and the added costs are ultimately passed down to patients.
The rise in severity negatively affects us all, but unless jurors’ attitudes change, batch claims decrease, and caps on noneconomic damages are protected, outlier verdicts will continue to become more commonplace.
References:
National Practitioner Data Bank. Washington, DC: U.S. Department of Health and Human Services; 2018. https://www.npdb.hrsa.gov/index.jsp. Accessed September 4, 2019.
Burns B. MedPL market updates. Presented at: PLUS Symposium Series, Healthcare and Medical PL; March 12, 2019; Chicago, IL.
Compiled by Guy Carpenter & Company, LLC.
Centers for Medicare and Medicaid Services. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Tren.... Published December 11, 2018. Accessed September 11, 2019.
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Nationwide, the percentage of medical malpractice claims greater than $500,000 has increased from less than 10 percent in 1999 to almost 20 percent in 2017.1 The number of verdicts in excess of $25 million has increased from four in 2014 to 17 in 2018.2 Nearly all states have seen these awards, with 41 states reporting verdicts greater than $10 million during the last six years.3
Clinicians may well ask why severity is increasing at the same time the medical community has made important strides in patient safety and the frequency of claims has dropped—at The Doctors Company, we’ve seen a drop from a high of 17 per 100 physicians in 2000 to fewer than seven per 100 physicians today.
The consolidation of healthcare is one driver of high verdicts. Large corporate defendants, almost always with very high policy limits, make attractive deep pockets in the eyes of sympathetic juries.
Monetary desensitization is another important factor. Our national debt exceeds $22 trillion, our annual budget is over $4 trillion, companies with no profits have valuations in the billions, and top athletes commonly sign contracts worth hundreds of millions of dollars. Though paid indemnities in average malpractice claims average many hundreds of thousands of dollars, and typically cover 100 percent of economic losses, these numbers may appear less impressive in an era where nine- and 13-digit numbers are commonly used.
Batch claims, lawsuits in which plaintiffs bring multiple claims against one defendant based on the same behavior, are another contributor. An example is the claims brought against compounding pharmacies alleging that breaches in sterile technique affected many individual patients.
Social media is a potent facilitator of batch claims. A patient with an unexpected adverse outcome from a particular operation may post, "Dr. X botched my surgery." Others who believe they have had a similar experience respond, and an attorney gathers them all into a batch claim. Claims of this kind were distinctly unusual in the past but are now an annual occurrence.
States lacking caps on noneconomic damages are particularly vulnerable to these factors. Without caps, awards for “pain and suffering” are unlimited and are almost always present in outlier cases.
The increase in severity adds to the costs of healthcare, which is already 18 percent of our gross national product.4 At The Doctors Company, we have seen a 55 percent increase in severity—the cost of the average claim—from 2000 to 2018. This drives an increase in insurance rates and the added costs are ultimately passed down to patients.
The rise in severity negatively affects us all, but unless jurors’ attitudes change, batch claims decrease, and caps on noneconomic damages are protected, outlier verdicts will continue to become more commonplace.
References:
National Practitioner Data Bank. Washington, DC: U.S. Department of Health and Human Services; 2018. https://www.npdb.hrsa.gov/index.jsp. Accessed September 4, 2019.
Burns B. MedPL market updates. Presented at: PLUS Symposium Series, Healthcare and Medical PL; March 12, 2019; Chicago, IL.
Compiled by Guy Carpenter & Company, LLC.
Centers for Medicare and Medicaid Services. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Tren.... Published December 11, 2018. Accessed September 11, 2019.
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Thursday, February 20, 2020
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Indemnification is an underappreciated contractual provision
Understanding an indemnification provision in a contract can lead to fewer headaches (and litigation) down the road.
Let’s start with the basics. An indemnitor is the party who is obliged to pay another party. An indemnitee is the party who is entitled to receive the payments.
According to Black’s Law Dictionary, indemnity is defined as “a duty to make good any loss, damage, or liability incurred by another.” This general definition omits some very key points. First, each word in an indemnification provision is broken down and evaluated by a court. Second, some items, such as criminal conduct or fraud, cannot be indemnified. Lastly, state law plays a key role in the drafting and interpretation of indemnification provisions. For physicians and healthcare industry participants alike, care should be taken to evaluate this provision, especially in light of the fact that a Business Associate Agreement (“BAA”) is a contract which is required under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). Often a BAA is signed separately from a Master Service Agreement (MSA) or other contract for goods and/or services. Importantly, the provisions of all contracts should align, including the choice of law, venue and indemnification provisions.
Key words and phrases that courts consider when evaluating indemnification provisions are: indemnify; hold harmless; or hold harmless, protect and indemnify. As a general rule, indemnification clauses do not cover attorney fees unless it is expressly stated. For example, California has statutes regarding indemnification. Courts are often called upon to interpret statutes. In Rooz v. Kimmel, 55 Cal. App. 4th 573 (1997), the court emphasized the distinction of utilizing “indemnify” versus “hold harmless”. The parties executed a contract with the language “hold harmless, protect and indemnify.” At issue in the case was “whether or not a hold harmless agreement absolved North American Title Company (“North American”) of liability for negligence when North American failed to record a deed of trust in a timely fashion.” The California Court of Appeals indicated that North American was not seeking indemnification, rather it was relying on the “hold harmless” provision, which was viewed more as a “release of liability”. Because of the language that the parties used and agreed to, the appellate court held that the agreement released North American from liability for its own negligence – whether active or passive.
How does the aforementioned case apply to healthcare and cybersecurity? First, words matter. Second, in healthcare and in the provision of IT/cybersecurity services, there are often multiple contracts, including a BAA. HIPAA does not require that an indemnification provision be included in a BAA; however, a lot of parties include one. Two key considerations related to the inclusion of an indemnification provision are knowledge of the party you are dealing with and obtaining reasonable assurance from the other party that it has the requisite technical, administrative and physical safeguards in place for compliance with HIPAA and other related laws. This could lead one party to insist upon a unilateral indemnification or both parties to agree upon a mutual indemnification. Basically, it comes down to the proper allocation of risk.
Indemnification clauses are nuanced and can be a trap for the ignorant. I’m still shocked when I see parties trying to indemnify against fraud and criminal actions, which is against public policy. The best place to start is by consulting competent legal counsel, understanding the risks, and doing adequate due diligence on another party. Failing to do so can lead to unanticipated liability and significant costs.
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Let’s start with the basics. An indemnitor is the party who is obliged to pay another party. An indemnitee is the party who is entitled to receive the payments.
According to Black’s Law Dictionary, indemnity is defined as “a duty to make good any loss, damage, or liability incurred by another.” This general definition omits some very key points. First, each word in an indemnification provision is broken down and evaluated by a court. Second, some items, such as criminal conduct or fraud, cannot be indemnified. Lastly, state law plays a key role in the drafting and interpretation of indemnification provisions. For physicians and healthcare industry participants alike, care should be taken to evaluate this provision, especially in light of the fact that a Business Associate Agreement (“BAA”) is a contract which is required under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). Often a BAA is signed separately from a Master Service Agreement (MSA) or other contract for goods and/or services. Importantly, the provisions of all contracts should align, including the choice of law, venue and indemnification provisions.
Key words and phrases that courts consider when evaluating indemnification provisions are: indemnify; hold harmless; or hold harmless, protect and indemnify. As a general rule, indemnification clauses do not cover attorney fees unless it is expressly stated. For example, California has statutes regarding indemnification. Courts are often called upon to interpret statutes. In Rooz v. Kimmel, 55 Cal. App. 4th 573 (1997), the court emphasized the distinction of utilizing “indemnify” versus “hold harmless”. The parties executed a contract with the language “hold harmless, protect and indemnify.” At issue in the case was “whether or not a hold harmless agreement absolved North American Title Company (“North American”) of liability for negligence when North American failed to record a deed of trust in a timely fashion.” The California Court of Appeals indicated that North American was not seeking indemnification, rather it was relying on the “hold harmless” provision, which was viewed more as a “release of liability”. Because of the language that the parties used and agreed to, the appellate court held that the agreement released North American from liability for its own negligence – whether active or passive.
How does the aforementioned case apply to healthcare and cybersecurity? First, words matter. Second, in healthcare and in the provision of IT/cybersecurity services, there are often multiple contracts, including a BAA. HIPAA does not require that an indemnification provision be included in a BAA; however, a lot of parties include one. Two key considerations related to the inclusion of an indemnification provision are knowledge of the party you are dealing with and obtaining reasonable assurance from the other party that it has the requisite technical, administrative and physical safeguards in place for compliance with HIPAA and other related laws. This could lead one party to insist upon a unilateral indemnification or both parties to agree upon a mutual indemnification. Basically, it comes down to the proper allocation of risk.
Indemnification clauses are nuanced and can be a trap for the ignorant. I’m still shocked when I see parties trying to indemnify against fraud and criminal actions, which is against public policy. The best place to start is by consulting competent legal counsel, understanding the risks, and doing adequate due diligence on another party. Failing to do so can lead to unanticipated liability and significant costs.
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